ACIT 21(1), MUMBAI V. ANAND ENTERPRISES, MUMBAI

ITA 5460/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0315 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 07-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V VIDYADHAR
• Assessee Lawyers: SAMEER G DALAL
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'G' BENCH, MUMBAI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI A.L. SAINI, ACCOUNTANT MEMBER ITA NO. 5460/MUM/2016 (ASSESSMENT YEAR: 2012-13) A C I T - 21(1) ROOM NO. 116, 1ST FLOOR PIRAMAL CHAMBERS PAREL, MUMBAI 400012 VS. M/S. ANAND ENTERPRISES 337, ASHISH INDL. ESTATE GOKHALE ROAD, DADAR (W) MUMBAI 400028 PAN AAAFA1725C APPELLANT RESPONDENT APPELLANT BY: SHRI V. VIDYADHAR RESPONDENT BY: SHRI SAMEER G. DALAL DATE OF HEARING: 22.02.2018 DATE OF PRONOUNCEMENT: 22.02.2018 O R D E R PER C.N. PRASAD, JM THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF THE CIT(A)-33, MUMBAI DATED 15.06.2016 FOR A.Y. 2012-13 ARISING OUT OF THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF INC OME TAX ACT, 1961 (HEREINAFTER THE ACT). 2. THE ONLY ISSUE IN THE APPEAL OF THE REVENUE IS IN R ESPECT OF DELETION OF ADDITION OF ` 70,78,937/- ON ACCOUNT OF DISALLOWANCE OF COMMISSIO N EXPENSES MADE BY THE AO. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S ENGAGED IN THE BUSINESS OF MANUFACTURING AND EXPORT OF READYMADE G ARMENTS AND FILED ITS RETURN OF INCOME ON 31.08.2012 DECLARING INCOME OF ` 1,89,26,060/-. THE ASSESSMENT WAS COMPLETED ON 31.03.2015 UNDER SECTIO N 143(3) OF THE ACT DETERMINING THE INCOME AT ` 2,60,04,933/-. WHILE COMPLETING THE ASSESSMENT THE AO DISALLOWED COMMISSION EXPENSES OF ` 70,78,937/- PAYABLE TO MR. LENNY KING, A NON-RESIDENT AGENT, O N THE SALES MADE TO ITA NO. 5460/MUM/2016 M/S. ANAND ENTERPRISES 2 ARCADIA GROUP OF U.K. THE AO DISALLOWED THIS COMMIS SION FOR THE REASON THAT THE ASSESSEE FAILED TO ESTABLISH WITH DOCUMENT ARY EVIDENCE THAT THE NON-RESIDENT AGENT RENDERED ANY SERVICE TO THE ASSE SSEE IGNORING THE EVIDENCES AND SUBMISSION MADE BY THE ASSESSEE. 4. ON APPEAL, THE CIT(A) DELETED THE DISALLOWANCE FOL LOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE AS WELL AS IN T HE CASE OF HARRISON GARMENTS DIVISION. 5. THE LEARNED COUNSEL FOR THE ASSESSEE BEFORE US SUBM ITTED THAT SIMILAR ISSUE IN APPEAL WHERE COMMISSION PAYABLE TO MR. LENNY KING OF ENGLAND WAS DISALLOWED IN A.Y. 2008-09 RIGHT FROM A SSESSMENT YEARS 2005-06 TO 2011-12 AND THE COORDINATE BENCH DELETED THE DISALLOWANCE CONSIDERING THE SUBMISSIONS AND EVIDENCES FURNISHED BY THE ASSESSEE TO ESTABLISH THAT THE NON-RESIDENT AGENT HAD RENDERED SERVICES TO THE ASSESSEE FOR EXPORTS MADE BY IT TO THE FOREIGN CUSTOMERS. TH E LEARNED COUNSEL FURNISHED A COPY OF THE ORDER OF THE TRIBUNAL IN AS SESSEE CASE FOR A.Y. 2008-09 TO 1010-11 AND REFERRING TO THAT ORDER HE S UBMITTED THAT SIMILAR ISSUE HAS BEEN CONSIDERED BY THE HON'BLE TRIBUNAL A ND DELETED THE DISALLOWANCE OF COMMISSION PAYABLE TO MR. LENNY KIN G OF ENGLAND. 6. THE LEARNED D.R., ON THE OTHER HAND, VEHEMENTLY SUP PORTED THE ORDER OF THE ASSESSING OFFICER. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE DECISION OF THE COORDINAT E BENCH IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2008-09 TO 2010-11 IN ITA NOS. 3021 & 6481/MUM/2012 AND ITA NO. 6747/MUM/2013 DATED 11.08 .2016. WE FIND THAT DURING THESE ASSESSMENT YEARS ALSO THE AO DISALLOWED AGENCY COMMISSION PAYABLE TO MR. LENNY KING OF ENGLAND FOR SECURING SALE ORDERS FROM FOREIGN MARKET ON WHICH 10% COMMISSION WAS PAY ABLE ON FOB VALUE BY THE ASSESSEE. SIMILAR DISALLOWANCE WAS MADE BY T HE AO DURING THE CURRENT ASSESSMENT YEAR HOLDING THAT NO SERVICES WE RE RENDERED BY THE NON-RESIDENT AGENT. THE HON'BLE TRIBUNAL AFTER EXAM INING THE CONTENTIONS AND EVIDENCES ON RECORD HELD THAT THE COMMISSION IS ALLOWABLE FOR THE ITA NO. 5460/MUM/2016 M/S. ANAND ENTERPRISES 3 SERVICES RENDERED BY MR. LENNY KING AND DELETED THE DISALLOWANCE FOLLOWING THE DECISION OF THE COORDINATE BENCH IN T HE CASE OF HARRISON GARMENTS DIVISION, A SISTER CONCERN OF THE ASSESSEE , IN ITA NOS. 3022 & 6480/MUM/2012. THE FACTS BEING IDENTICAL, RESPECTFU LLY FOLLOWING THE DECISION OF THE COORDINATE BENCH IN ASSESSEES OWN CASE FOR A.Y. 2008-09 TO 2010-11 WE UPHOLD THE ORDER OF THE LEARNED CIT(A ) IN DELETING THE DISALLOWANCE OF COMMISSION PAYABLE TO MR. LENNY KIN G. GROUNDS RAISED BY THE REVENUE ARE REJECTED. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND FEBRUARY, 2018. SD/ - SD/ - (A.L. SAINI) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 22 ND FEBRUARY, 2018 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -33, MUMBAI 4. THE CIT - 21, MUMBAI 5. THE DR, G BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.